Monday, December 17, 2007
of interest
The Real Estate Bubble End Result
I found this interesting. An American explains reasons why he thinks (in 2005) the bubble is about to burst, comparing it with Japan. Sounds like hes an "honest joe" and he explains that from 1975 to 2000 prices have remained flat with a (bubble) explosion thereafter. He says (take note Maddisson) "Yes, there could be another year or two of good times, and I'll miss 'em. But I'm okay with that."
Posted by techieman @ 02:06 PM (760 views)
One thought on “of interest”
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drewster says:
techieman, thanks for the interesting post. A number of other commentators have also argued that that the housing bubble economies* today are like Japan c1990. That’s certainly my view too, and that’s where I differ from s2r1 and others who expect a far greater financial / banking collapse. A lot depends on how our governments respond to the crisis. As a number of bloggers have pointed out, there are only three ways out of a bed debt crisis:
1) Let the banks go bust and have savers lose their deposits (does anyone remember BCCI going bust in 1991?)
2) Nationalise the bad banks and pay off the bad debt out of future tax receipts for the next 15 years (the Japanese way, probably the UK way)
3) Print money to inflate the debt away (probably the American way)
The European Central Bank is restricted since they can’t nationalise banks and I don’t think their national governments are allowed to either. They’ll be placed under great political pressure to print more money, but will probably refuse; so that leaves just option #1, meaning Spanish and Irish banks could be going bust soon! Now I see why we didn’t join the Euro….
*(According to Wikipedia which is not a reliable source, the global housing bubble encompasses: “United States, Britain, Italy, Australia, New Zealand, Ireland, Spain, Poland, South Africa, Israel, Greece, Canada, Norway, Singapore, Sweden, Baltic states, India, Romania, South Korea, Russia, Ukraine and China”. That’s a lot of places!)